Merger Completions

On September 1, Fleet Bank, NA, Jersey City, NJ, merged with Fleet National Bank, Providence, RI, under the charter and title of Fleet National Bank. FleetBoston Financial Corporation, Boston, MA, the parent company of Fleet National Bank, was formed by the October 1, 1999 merger of holding companies Fleet Financial Group, Boston, MA, and BankBoston Corporation, Boston, MA. As of June 30, 1999, Fleet Financial Group, Boston, MA, had total deposits of $42.2 billion and ranked first among all commercial banking and thrift organizations in New England. As of the same date, BankBoston Corporation, Boston, MA, had total deposits of $34.6 billion and ranked second.

On September 1, Union Bankshares Company, Ellsworth, ME, completed its acquisition of Mid-Coast Bancorp, Inc., Waldoboro, ME. As of June 30, 1999, Union Bankshares Company, Ellsworth, ME, had total deposits of $185.1 million and ranked 20th among all commercial banking and thrift institutions in Maine. As of the same date, Mid-Coast Bancorp, Inc., Waldoboro, ME, had total deposits of $54 million and ranked 35th. (Internal Notice, 9/1; 9/5/00; SNL Weekly BankFax, 10/4/99)

On September 1, Bancorp Rhode Island, Inc., Providence, RI, became a bank holding company through the acquisition of Bank Rhode Island, Providence, RI. (Internal Notice, 9/20/00)

On September 1, The Hartford Bank, Hartford, CT, which has a federal savings bank charter, opened for business. The institution is currently operating as a non-depository trust. (Internal Notice, 9/1/00)

On September 5, Rockland Savings Bank, Rockland, MA, changed its title to South Coastal Bank. The thrift is one of two commercial banking or thrift organizations based in Rockland; the other is Rockland Trust Company, a bank which purchased 16 branches from Fleet National Bank, Providence, RI, on August 5. (Internal Notice, 9/20/00)

On August 31, Boston Private Financial Holdings, Boston, MA, completed its acquisition of Sand Hill Advisors, Inc., Menlo Park, CA. Sand Hill provides investment advisory services to high-net-worth individuals and their families. (SNL Weekly BankFax, 9/5/00)

On September 13, the Chase Manhattan Corporation, New York, NY, signed a definitive agreement to acquire J.P. Morgan , Company, New York, NY, in a stock transaction. The new company’s title will be J.P. Morgan Chase , Company. The acquisition of J.P. Morgan, best known for its investment banking unit, represents an attempt by Chase to strengthen and expand its investment banking presence. Chase is known primarily for its commercial banking operations; as of June 30, 2000, Chase’s subsidiary bank, the Chase Manhattan Bank, New York, NY, ranked second among commercial banking and thrift organizations in the United States, with total assets of $320.5 billion.

The merger would combine two of the top five bank holding companies in the U.S. As of June 30, 2000, only Citigroup, Inc., New York, NY ($791.3 billion), and Bank of America Corporation, Charlotte, NC ($679.5 billion), had more total assets than the pro forma J.P. Morgan Chase , Company ($662.4 billion). The deal, which is subject to regulatory and shareholder approval, is expected to be completed in the first quarter of 2001. (Boston Globe, 9/14; Federal Reserve System’s National Information Center; J.P. Morgan , Co. Press Release, 9/13; NY Times, 9/14/00)

On September 6, Citigroup, Inc., New York, NY, signed a definitive agreement to acquire Associates First Capital Corporation, Dallas, TX, in an all-stock deal. Through the acquisition, Citigroup will gain inroads into Japan and Europe, and potentially add significantly to its equity lending operations. Associates is the largest publicly traded finance company in the U.S., with managed assets of more than $100 billion. The deal, which is subject to regulatory and shareholder approval, is expected to be completed at the end of 2000. (Citigroup, Inc. Press Release, 9/6; SNL Weekly BankFax, 9/11/00)

On September 5, NBT Bancorp, Inc., Norwich, NY, and BSB Bancorp, Inc., Binghamton, NY, announced that their pending merger has been approved by the Office of the Comptroller of the Currency (OCC) and that they have received a waiver of application requirements from the Federal Reserve Bank of New York. The U.S. Department of Justice (DOJ) approved the merger last month, but required BSB to sell a branch in Norwich, NY, as a condition of approval. (SNL Weekly BankFax, 9/11/00)

On September 6, Valley National Bancorp, Wayne, NJ, signed a definitive agreement to acquire Merchants New York Bancorp, Inc., New York, NY. The transaction is scheduled to be completed in the first quarter of 2001. (SNL Weekly BankFax, 9/11/00)

On August 29, Provident Savings Bank, Jersey City, NJ, signed an agreement to acquire Ridgewood Financial, Inc., Ridgewood, NJ, in a cash deal valued at $47.7 million. The transaction is subject to regulatory and shareholder approval. (SNL Weekly BankFax, 9/5/00)

During the week of September 18-22, the Defense Department abandoned the idea of prohibiting banks from collecting surcharges at automated teller machines on military bases. In August 1999, the department formally proposed a surcharge ban and solicited comments. The Pentagon had reasoned that military people were particularly hard-hit by surcharges because of their low pay and dependence on ATMs when stationed far from their hometown banks. Many banking industry executives submitted comments, saying that such a policy would discourage banks from operating ATMs on military bases, thus harming, rather than benefiting, military personnel. Pentagon staff accountant Tom Summers said the decision will be reflected in next month’s Federal Register, which will have no mention of a surcharge ban. (American Bkr., 9/25/00)

On September 18, the Office of Thrift Supervision (OTS) issued a "Privacy Preparedness Check-up" for examiners to use as they discuss with institutions their plans to meet the provisions of the Gramm-Leach-Bliley Act, which must be in place by July 1, 2001. Examiners are to administer the check-up during on-site compliance examinations during the remainder of 2000, as well as in on-site and off-site contact with all other OTS-regulated institutions in the first four months of 2001. Similar check-ups were made by the OTS, other regulators, and regulated institutions, in 1998 and 1999, in order to monitor Y2K compliance. (SNL Weekly BankFax, 9/25/00)

On September 18, FDIC Chairwoman Donna Tanoue said that any reform of deposit insurance must take into account individual institutions’ attitudes concerning risk. In a speech at the American Bankers Association’s annual convention, Tanoue said that marginal risk, defined as additional risk brought to the system by a new or rapidly expanding institution, must be addressed. "Some institutions might find their cash flows with the deposit insurance fund net to zero - the same as in the current system," Tanoue said. "But I would argue that, from an insurance perspective, not all zeroes are equal. A system in which banks are always charged explicitly for the marginal risk they pose is preferable to a system without this feature. Charging explicitly for marginal risk is critical if premiums are to provide appropriate incentives and reduce moral hazard."

Tanoue stressed, however, that she does not advocate premium rebates. "To date, with the exception of our longstanding support of merging the BIF and SAIF, we have not endorsed anything, although we are looking hard at the issues. That means rebates are on the table, just as increased deposit insurance coverage is." The FDIC expects to make its deposit insurance reform recommendations to the next Congress. (SNL Weekly BankFax, 9/25/00)

On September 18, Federal Reserve Chairman Alan Greenspan said that the technological revolution that has changed the way banks do business shows no sign of slowing. In a speech to the American Bankers Association, Greenspan said technological innovation in the financial industry forces Fed regulators to change the way they supervise banks.

"Today’s products and rapidly changing structures of finance mean that supervisors are backing off from detail-oriented supervision, which no longer can be implemented effectively," he stated. "We are moving toward a system in which we judge how well your internal-risk models are functioning and whether the risk thus measured is being appropriately managed and offset with capital. And we are moving toward a system in which public disclosure and market discipline are going to play increasing roles, especially at our large institutions, as a necessity to avoid expansion of invasive and burdensome supervision and regulation."

Greenspan added that rapid access to quality information is reducing uncertainty in lending. Knowing the viability of their customers "is all that prevents bankers from the equivalent of lending on the outcome of a roulette wheel’s spin," he said. Risk premiums, internal-risk classifications and modeling, and credit scoring are being more finely tuned as a result of technological changes, according to the Chairman. "Moreover, the quickened pace of market adjustments resulting from the newer technologies has significantly shortened the interval over which a debt can move from investment-grade to default," Greenspan said. "This delimits the capacity of a bank to adjust its exposure to a failing borrower before the bank is confronted with default." (SNL Weekly BankFax, 9/25/00)

Items in Bank Notes focused on developments affecting banking structure in New England. They were condensed from daily newspapers and press releases from federal and state financial regulatory agencies. Their reproduction does not imply our endorsement of the accuracy, opinions or policies reflected in the subject matter.Items in Bank Notes focused on developments affecting banking structure in New England. They were condensed from daily newspapers and press releases from federal and state financial regulatory agencies. Their reproduction does not imply our endorsement of the accuracy, opinions or policies reflected in the subject matter.